Acquiring new customers is a constant challenge and always top of mind for companies and their executive suites. It is made harder by that fact that consumers are not only being sold something everywhere they turn, but they are more aware of it than ever. Because the cost of customer acquisition is so high, companies often offer something for "free" as a catalyst for consumer engagement. However, misuse of the term “free” can land companies in hot water, as the term is a red flag for regulators tasked with protecting consumers from misleading and deceptive advertising.
It is not that companies can’t use the term “free”, but rather they just need to be careful when doing so as to not end up in the crosshairs of regulators and consumer groups. While not an exhaustive list, below are a few things to keep in mind before marketing something as “free” for consumers:
Understand the Law:
- Familiarize yourself with the Federal Trade Commission (FTC) guidelines and other local advertising laws concerning the use of the term "free."
- Be aware of the consequences of misleading advertising, both legally and for your brand reputation.
Saying Free” Without Saying Free
- You don’t actually have to say the word “free” to be considered offering something for free.
- Check to see if your materials use words or phrases that functionally mean the some thing, such as:
- No charge or additional charge;
- Buy one, get one;
- Two for one;
- Or phrases with similar meaning.
Make Sure Free Means Free:
- Ensure that the advertised product or service is indeed free, with no hidden costs or fees.
- Don’t use “free” if the cost is bundled into another item or service.
- Don’t try and recoup costs in other ways.
- If your offer has conditions, they should be clearly stated and easily accessible.
- Ensure that any qualifiers or conditions like “Buy One Get One Free” are prominently displayed.
- If there are exclusions to the offer, make them clear from the outset.
- Display exclusions near the offer, in a readable font and size.
- If the free offer is time-bound, mention the duration explicitly.
- Ensure the end date or the conditions under which the offer terminates are clear.
- Don’t advertise something as for a “Limited Time” if the end is indefinite.
- Make the process of redeeming the free offer straightforward and hassle-free.
- Avoid complex terms and conditions that might confuse the customer and limit their ability to claim the item for free.
While not a complete list, taking these considerations into account will allow companies to leverage the power of “free” while reducing regulatory risk.
DISCLOSURE: This article does not constitute legal advice and should not be relied upon for business or legal decisions. Blee is not a law firm, or a substitute for an attorney or law firm. Blee is not liable for any damages arising from the use of or inability to use our service, product, or any material contained in it, or from any action or decision taken as a result of using our product or service. If you need legal or tax advice, you should consult an attorney or tax professional in your geographic area.